Mutual fund houses are expected to go slow on NFOs this year. Here’s why
The asset management companies (AMCs) are slowing the pace of launching new mutual funds schemes and drafted the documents for only 59 new fund offerings (NFOs) so far this year. The number is far less than 70 NFOs launched during the corresponding period in the previous fiscal year and the experts pointed out many reasons for the same.
In August so far, only two draft documents were filed by fund houses Bajaj Finserv Mutual Fund and WhiteOak Capital Mutual Fund, as per data from market regulator Securities Exchange Board of India (SEBI).
As per experts quoted by the news agency PTI, this year the NFOs are expected to remain much lower than the 228 schemes floated in 2022 and 140 during 2021. The reason behind the phenomena is the combination of factors and other dynamics related to mutual funds which are impacted by internal and external factors.
“AMCs may be concentrating on managing and promoting their existing schemes, rather than launching new ones. This strategy allows them to maximize the returns for existing investors and maintain stable assets under management,” news agency PTI quoted SAS Online founder and CEO Shrey Jain.
Moreover, the recent surge in the market to unprecedented levels might be contributing to AMCs exercising prudence in introducing new fund offers (NFOs). In times of heightened market levels like these, AMCs could be apprehensive about the potential for a market correction or downturn, as pointed out by Trust MF President and CBO Ajaykumar Gupta.
Cumulative collections of nearly 20,000 crore
Regarding fund mobilization, the cumulative collection from mutual funds’ new fund offers (NFOs) has reached nearly 20,000 crore in 2023 up to this point. Comparatively, it was ₹62,187 crore in 2022, ₹99,704 crore in 2021, and ₹53,703 crore in 2020.
This year, asset management companies (AMCs) have submitted schemes in both active and passive categories. Additionally, documents have been filed in the index and exchange-traded fund (ETF) categories to cater to both passive and active investors.
During 2022, the index fund segment saw the highest number of fund launches (84), followed by fixed maturity plans (49), and other ETFs (39). However, in 2023, the pace of launching active schemes has been relatively slower.
(With inputs from PTI)
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Updated: 06 Aug 2023, 04:44 PM IST
Ganesh
http://ganesh@finplay.inFinance enthusiast, Mutual fund expert.